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August 31, 2003

Block Traders Nix Decimalization, Says Survey

By Gregory Bresiger

Decimalization, which is expected to be one of the topics on the market structure agenda in Congress, is not working for most block traders, according to a new survey.

About 80 percent of some 50 block traders surveyed said that decimalization has been a "net negative" for their clients. And, by about the same percentage, block traders said decimalization should be modified, according to the survey by Harborside+. Harborside+ operates a block trading system. The survey was sent to 233 traders on the buyside and sellside.

Asked if the solution should be a minimum increment or to widen the spreads for everyone, 95 percent of respondents said that everyone's spreads should be widened.

The Evidence

"These results suggest that decimal trading is still not broadly accepted among institutional block traders," said Michael Cashel, chief operating officer of Harborside. The survey was sent via e-mail.